‘Theresa May suggested that some extra cash will be provided by a “Brexit dividend”. And the tooth fairy is visiting me tonight.’
Photograph: Henry Nicholls/AFP/Getty Images

One of the more sensible things that the Tories did during their otherwise terrible general election campaign last summer was not to make too many promises about tax. Though they never explicitly acknowledged that taxes might have to go up during this parliament, Theresa May and Philip Hammond signalled this could be so when they dropped many of the pledges inherited from David Thingy and George Whatnot. Anyone with a basic diploma in political semaphore could intuit that this meant that there was a strong possibility that taxes would rise.

Possibility has turned into racing certainty. That is one conclusion we can draw from Mrs May’s announcement that there will be £20bn extra per year for the NHS by 2023. Even the magic money tree can’t produce that kind of cash without some watering by the taxman. This is more than the chancellor wanted to sign off on before Jeremy Hunt, the wily survivor as health secretary, managed to persuade the prime minister that money would be the most popular 70th birthday present for the NHS.

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While the new financial settlement is more generous than the chancellor wanted, the money is less than many analysts think the NHS needs if it is to handle the pressures of an ageing and growing population. A recent joint study by the Institute for Fiscal Studies and the Health Foundation suggests that the spending trajectory proposed by the government may only just about sustain a “status quo” NHS. So headlines suggesting the rise is “dramatic” are misleading, as is Mrs May’s rhetoric about a “profound transformation”. Spin today, repent at leisure. That is my free advice to her propagandists. Some of the hyperbolic descriptions attached to this extra money will do the government more harm than good in the long run if they excite anticipation of radical improvements that do not then materialise.

That is one reason why the Conservatives would be foolish to imagine that they will get much credit. Another reason to doubt that there will be joyful whooping in hospital corridors is that there is no such thing as enough when it comes to NHS spending. Staff and users often express their love for the health service, but that is rarely accompanied by any gratitude towards the politicians in charge of it. The NHS received exceptionally enhanced funding when Tony Blair was in office. His big increment in spending did show up in improved provision, falling waiting times and record public satisfaction, but this did not guarantee a smooth ride for his health secretaries. On one memorable occasion, Patricia Hewitt got a torrid reception from the Royal College of Nursing when the annual convocation of the angels booed her like the devil.

For Tories, it is invariably worse. Voters are inveterately suspicious of Conservative intentions towards the NHS. In the competition with Labour to be regarded as best for health, the most Tories can aspire to achieve is a position of “neutral”. Mr Cameron achieved that in opposition, only then to throw away the benefit of the doubt in government by allowing the Lansley reorganisation that no one had voted for and fewer understood.

So the best-case scenario for the Conservatives is not that this money will be transformative of the NHS and public trust in the Tories. The most they can hope for is that the money will shore up a vulnerable flank by preventing a series of rolling and roiling health funding crises up to the next election. Labour will say the money is not enough. This might be true, but the public will be conscious, and may discount accordingly, that Labour always says the Tories are not spending enough on health. The Tory aim is to reduce the salience of health as a cause of public discontent and make it less probable that the state of the NHS will induce swing voters to support Labour rather than them at the next election.

‘Asking where the money is coming from to pay for spending promises is not natural territory for the leader of the Labour party.’ Photograph: PA

There is still a huge hole in the government’s plans. Where is the money going to come from? Jeremy Corbyn made a bit of a hash of posing this question at his most recent encounter with the prime minister. Asking where the money is coming from to pay for spending promises is not natural territory for the leader of the Labour party. That doesn’t make it a bad question and Theresa May has yet to come up with a coherent answer. She has suggested that some extra cash will be provided by a “Brexit dividend”. And the tooth fairy is visiting me tonight, the moon is made of cheese and Elvis lives on Atlantis where he and Lord Lucan ride their pet unicorns. There is no “Brexit dividend” for the NHS – or for anything else. Everyone knows this is a fantasy. The government has itself accepted the Office for Budget Responsibility’s forecast that the public finances will be weaker, not stronger, as a result of Brexit.

It is generally supposed at Westminster that Mrs May made herself complicit in this Johnsonian fabrication in the hope that it will induce the hard Brexiters in her party to swallow some of the concessions she is going to have to make in the negotiations with the EU. Even if it has that effect, and I’m highly sceptical, it was foolish of Mrs May to parrot that most mendacious piece of Leaver baloney.

So where will the money come from? It is hard to see how it can be found by cutting elsewhere. As I remarked a few weeks ago, there are significant spending pressures on other departments and electoral challenges for the Tories virtually across the spectrum of government activity.

Sajid Javid has buried the truncheon with the Police Federation by as good as telling them that he’ll be fighting the Treasury to secure improved funding. There is Tory backbench pressure to relieve the squeeze on school budgets. Gavin Williamson has already fallen out with the chancellor over the condition of the armed forces and the defence secretary now seems to be going to war with the prime minister as well. Local government has already had central government support slashed by nearly a half since 2010. There’s nothing left to cut from housing and transport.

The chancellor indicated his irritation with the health settlement by telling the cabinet that the bill for Mr Hunt’s boost will be paid for by the rest of them with a continuing clamp on all other departmental budgets. The Treasury then briefed the media that other spending ministers will remain strapped in austerity straitjackets. Good luck to the chancellor with holding that line if he does not have the reliable support of the prime minister.

She edged towards candour when she acknowledged that taxes are going to rise “across the nation” while claiming this would happen “in a fair and balanced way”. What she didn’t say is which taxes. In this case, it is not because she is being dishonest, but because she simply doesn’t know. A hypothecated health tax has been shot down. The Treasury hates that concept and there are big problems with linking NHS funding to the ebbs and flows of the economy. A wealth tax is an idea that has been gaining support among some Tories. They favour it both for the revenues it could produce and because asking for a larger contribution to the exchequer from asset-rich baby boomers might be represented as an act of intergenerational fairness. The obvious target of a wealth tax is property, but that is politically perilous, as Mrs May discovered when the “dementia tax” blew up her campaign during the last election. There are a lot of affluent baby boomers with property wealth among Tory members and MPs.

One way to bring in more is to freeze income tax thresholds. The Treasury has often used this as a sneaky method of harvesting extra revenue. But Tory MPs are alert to that, many do not like it and it would breach one of the tax promises that they did commit to in their last manifesto. Any kind of tax rise sticks in the throat of many Tories. Hiking taxes is not what they think they came into politics to do. Getting tax increases through parliament will be additionally tough when the government lacks a majority.

Mrs May has made this dilemma even thornier by separating the announcement of the extra spending for the NHS from Mr Hammond’s next budget, which is not until November. Five months will have passed by then and the extra health funding will be a fading headline, while tax rises will be a live and hot issue of the day.

The health service may have been promised its birthday present, but it has been bought on political tick. We still don’t know who will pay for it. Neither does the prime minister or the chancellor.